The IMF has cut its economic growth projection for South Africa for the second time this year in its World Economic Outlook. In January, the IMF cut the country’s growth forecast to 1.0% from 1.8% and now again to only 0.9%.
Although the report does not give detail about the reasons for the cut in the projected growth rate, reasons for the January cut were rail and port disruption at Transnet and Eskom’s electricity woes. The national election this year is also not expected to help the economy grow. According to the IMF, the country’s inflation rate will only reach the target of 4.5% set by the South African Reserve Bank next year, which is in line with economists latest statements that inflation will not decrease sufficiently this year for the Sarb to cut the repo rate.IMF cuts SA growth forecast for 2024 due to Transnet and EskomHowever, the global picture looks much better.
However, Gourinchas said the forecast for global growth five years from now, at 3.1%, is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.
The IMF says risks to the outlook are broadly balanced. “Risks to the global economic landscape diminished since October 2023, leading to a broadly balanced distribution of possible outcomes around the baseline projection for global growth, from a clear downside tilt in the outlook for April and October.